Valspar Trade Secrets to China

On Dec. 8, 2010, David Yen Lee, a former chemist for Valspar Corporation, a Chicago paint manufacturing company, was sentenced in the Northern District of Illinois to 15 months in prison for stealing trade secrets involving numerous formulas and other proprietary information valued up to $20 million as he prepared to go to work for a competitor in China. Lee, formerly a technical director in Valspar Corp’s architectural coatings group since 2006, pleaded guilty in Sep. 2010 to using his access to Valspar’s secure internal computer network to download approximately 160 original batch tickets, or secret formulas for paints and coatings. Lee also obtained raw materials information, chemical formulas and calculations, sales and cost data, and other internal memoranda, product research, marketing data, and other materials from Valspar. Lee admitted that between Sep. 2008 and Feb. 2009, he had negotiated employment with Nippon Paint, in Shanghai, China and accepted employment with Nippon as vice president of technology and administrator of research and development. Lee was scheduled to fly from Chicago to Shanghai on Mar. 27, 2009. He did not inform Valspar that he had accepted a job at Nippon until he resigned on Mar. 16, 2009. Between Nov. 2008 and Mar. 2009, Lee downloaded technical documents and materials belonging to Valspar, including the paint formula batch tickets. He further copied certain downloaded files to external thumb drives to store the data, knowing that he intended to use the confidential information belong to Valspar for his own benefit. There was no evidence that he actually disclosed any of the stolen trade secrets. This investigation was conducted by the FBI.